Divided Commission Expected to Recommend Extending Net Tax Freeze

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Online shoppers still pay no sales tax for most purchases, but how long can the holiday last? The 19-member Advisory Commission on Electronic Commerce is scheduled to issue recommendations to Congress this week. Despite the fact that a majority of commission members are reportedly in favor of leveling the playing field between bricks-and-mortar businesses and Internet dot-com stores, they're not expected to suggest repeal of the federal tax freeze anytime soon. The problem is no one agrees on how sales taxes, usually levied by states, could be set and collected, or by whom.

A consensus was reached after Virginia governor James Gilmore proposed a five-year extension in lieu of agreement on how the transition to taxation could be made. The commission is also expected to recommend that Congress repeal the 3 percent telephone excise tax that mars the phone bills of Americans. Another recommendation would urge Congress to permanently ban taxes on Internet access. (Maybe that modem tax hoax had some effect after all.) MORE >>